Observation (CEACR) - adopted 2007, published 97th ILC session (2008)

Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) - New Zealand (Ratification: 1938)

The Committee notes the Government’s detailed report and the information provided in response to earlier comments made by the New Zealand Council of Trade Unions (NZCTU). It also notes the observations made by the Business New Zealand (BNZ) and the Government’s rely to these observations.

Minimum wages for training

1. The Committee notes the Government’s explanations concerning the introduction of a training minimum wage following the adoption of the Minimum Wage Amendment Act 2003 and the subsequent setting of the minimum training rate at 80 per cent of the adult minimum wage rate. The Government states that the minimum training wage strikes a balance between the payment of a socially acceptable minimum wage and the need to promote training opportunities and that the implementation of a system of “trainee scales”, as suggested by the NZCTU, is not planned at this stage.

2. The Committee notes, in this connection, the NZCTU’s observation that the current training rate is too low and is likely to act as a disincentive to workers over 20 years of age seeking to enter training. The NZCTU considers that it should be raised to 90 per cent of the adult minimum wage. The Committee requests the Government to keep it informed of any further consultations on the level of the trainee wage rate.

3. Moreover, the Committee notes the comments made by the BNZ referring to the absence of research into the effects of either the trainee rate or of the youth minimum wage on youth unemployment. In its reply, the Government indicates that there are various researches conducted on this subject, including one commissioned by the Department of Labour in 2006 entitled “Relativities between youth and adult minimum wage rates”. The Committee would appreciate receiving a copy of the research in question or of other related studies and surveys.

4. As regards the youth minimum wage, the Committee notes that the NZCTU is in favour of the Minimum Wage (Abolition of Age Discrimination) Bill currently under consideration by the Government, which would abolish the youth minimum wage and would thereby allow the adult minimum wage to apply to all workers except those with specific exemptions such as the trainee rate. The Committee asks the Government to keep it informed of all future developments concerning the adoption of the draft legislation.

Minimum wages for disabled persons

5. The Committee notes the Government’s reference to the Minimum Wage Amendment Act 2007, which removed the blanket exemptions from the minimum wage for persons with disabilities and now allows for exemptions only on an individual basis. In this regard, the Committee notes the BNZ’s concern that severely disabled persons may experience difficulty in finding appropriate employment now that blanket exemptions no longer apply. In its response, the Government states that an individualized exemption regime provides a fairer and more transparent system for persons whose disability genuinely impacts on their work performance while the system of blanket exemptions had to be repealed as inconsistent with domestic and international human rights law. The Committee also notes the position of the NZCTU, which welcomes the repeal of the Disabled Persons Employment Promotion Act and supports the right of disabled persons to receive at least the minimum wage for their work.

Enforcement of minimum wage legislation

6. With reference to the point raised by the NZCTU concerning the lack of enforcement of minimum wage provisions for workers in isolated situations and where provision of accommodation is used to justify wage deductions, the Government indicates that the number of full-time labour inspectors will be increased to 30 while the staff in the Department of Labour’s Workplace Contact Centre (responsible for proactively disseminating information on employment rights) has also been increased from 19 to 30. The Government further explains that the labour inspectorate together with the Workplace Contact Centre are part of a system designed to ensure compliance by providing information, to expedite the recovery of any underpayment and to reduce the need for sanctions. The Government also refers to other initiatives such as the Employment Relations Education Leave under which union members are entitled to paid leave to attend approved courses with a view to increasing their knowledge about employment relations.

The requirement for tripartite consultations on minimum wage issues

7. The Committee notes the view expressed by the BNZ according to which consultations on minimum wage-related issues appear to be a formality for the Government rather than a genuine advice-seeking process as the BNZ’s advice is almost invariably ignored. In its reply, the Government states that it values the views and input from the social partners, even though consultation does not always mean advice will be followed. The Committee recalls, in this respect, that as it has pointed out on numerous occasions, the term “consultation” has a different connotation both from mere “information”, at one end of the scale, and from “co-determination”, at the other end of the scale. While it is up to governments to guarantee that employers’ and workers’ organizations have a meaningful say in matters that are the subject of consultation and that their proposals are thoroughly studied and duly taken into consideration, this does not mean that prior consent, and even less so agreement, on the part of these organizations is needed before relevant decisions can be taken.

8. The Committee notes the statistical information provided by the Government, in accordance with Part V of the report form, concerning the size of the workforce (2,117,000 workers aged 15 and over as of December 2006), the evolution of minimum hourly wage rates from 2002 to 2007 (as from 1 April 2007, NZ$11.25 for adults, NZ$9 for youth between 16 and 17 years of age and for trainees), the number of workers covered by the minimum wage (as of 1 April 2007, 109,900 adults and 9,200 young workers), and the number of minimum wage inquiries, complaints, investigations and breaches observed in the period 2003–05. The Committee would be grateful if the Government would continue supplying up to date and documented information on the practical application of the Convention.

9. Finally, the Committee wishes to draw the Government’s attention to the conclusions of the ILO Governing Body on the continued relevance of the Convention based on the recommendations of the Working Party on Policy regarding the Revision of Standards (GB.283/LILS/WP/PRS/1/2, paragraphs 19 and 40). In fact, the Governing Body has decided that Conventions Nos 26 and 99 are among those instruments which may no longer be fully up to date but remain relevant in certain respects. The Committee therefore suggests that the Government should consider the possibility of ratifying the Minimum Wage Fixing Convention, 1970 (No. 131), which marks certain advances compared to older instruments on minimum wage fixing, for instance, as regards its broader scope of application, the requirement for a comprehensive minimum wage system, and the enumeration of the criteria for the determination of minimum wage levels. The Committee requests the Government to keep the Office informed of any decision taken or envisaged in this regard.